B. Orient Express Bhd has successfully secured a new project in Nusa Jaya. Mr. Johnny, a Finance Director, proposes to i

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B Orient Express Bhd Has Successfully Secured A New Project In Nusa Jaya Mr Johnny A Finance Director Proposes To I 1 (89.23 KiB) Viewed 109 times

B. Orient Express Bhd has successfully secured a new project in Nusa Jaya. Mr. Johnny, a Finance Director, proposes to issue 100,000 units of a new bond at net issue price less discounted value to finance the project. The discount rate is estimated to be 5% of the par value. The new bond, which has a par value of RM1,000, and a ten-year maturity period, will pay a 10% annual coupon. Recently, the company received a rating “AA” from Malaysian Rating Corporation Bhd on the bond issued. Required: i) Determine the yield to maturity of the new bond assuming the interest is payable on a yearly basis. (4 marks)